A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Ossandón, José Article Notes on market design and economic sociology economic sociology_the european electronic newsletter Provided in Cooperation with: Max Planck Institute for the Study of Societies (MPIfG), Cologne Suggested Citation: Ossandón, José (2019) : Notes on market design and economic sociology, economic sociology_the european electronic newsletter, ISSN 1871-3351, Max Planck Institute for the Study of Societies (MPIfG), Cologne, Vol. 20, Iss. 2, pp. 31-39 This Version is available at: http://hdl.handle.net/10419/200967 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. 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In order to increase the use of re- Notes on newable sources such as wind, the electricity grid of the future must be more “flexible.” This project tests a way of creating flexibility by means of a complicated market design intervention that integrates activities at three levels. At household level, the project tests ways of making use of domestic appliances to react to the needs of the and economic electricity grid – electric heating systems that are turned on when the wind is blowing, for instance. At a second level, the project tests the introduction of new sociology commercial actors, called aggregators, which are firms that are expected to make a business model based on pooling and selling the flexibility of large groups of households. And, finally, the project tests a new trad- José Ossandón ing platform on which the flexibility collected by ag- gregators will be bought by firms involved in energy distribution or network maintenance.1 The cases of school education in Chile and EcoGrid in Denmark are not isolated examples. As the papers in a special issue I am co-editing that is about onsider the following two exam ples: Inspired by to appear in Economy & Society2 show, these are cases Milton Friedman’s proposal that demand-side of a broader transition. It is a movement from a type of C subsidies and consumer choice would enhance policy-making which assumed that markets, or some school competition, which in turn should improve learn- of the features attributed to markets (i.e., competition, ing and the efficiency of the system as a whole, policy- choice, property rights, or price), will solve the most makers radically reformed school education in Chile in diverse collective problems and, once in place, will the early 1980s. After several regulatory modifica- tions, education in Chile is still heavily mar- ket-based. However, since the massive student re- José Ossandón is an Associate Professor at the Department of Organization volt of 2011, the area has been hugely controver- at the Copenhagen Business School. His current work focuses on new modes sial. One of the main issues has been that, in the of economic knowledge produced to evaluate, repair, and govern mar- current system, not only are parents trying to ket-based policy instruments, and on the encounters between financial firms’ choose the best schools for their children, schools, devices and households’ accounting and calculative practices. [email protected] in order to maintain or improve their positions in the national test that ranks them, are actively ex- cluding students with learning difficulties or families that work on their own, to situations in which policy-mak- seem to them to be more complicated. In order to find a ing is understood as continuous market organization. way out of the impasse, policymakers are currently imple- Policy-making becomes evaluation, diagnosis, design, menting a particular technical solution, namely central- and repair of markets. Markets are increasingly seen ized clearing-house mechanisms, such as the one imple- both as solutions and as technical conundrums. Mar- mented in Boston and developed by economists such as kets have become socio-technical objects that need Alvin E. Roth. The work of market designers, Roth ex- expert design and repair in order to work properly and plains, “is to know the workings and requirements of par- solve the most diverse matters of collective concern. ticular markets well enough to fix them when they’re bro- Markets do not simply work; they have to be put to ken or to build markets from scratch when they’re miss- work. ing” (Roth 2007: 1). Policymakers in Chile intend to In our small research group on Markets and re-design the existing school education market in order to Valuation 3 in Copenhagen Business School’s Depart- reduce discrimination. ment of Organization, we have made the work to put EcoGrid 2.0 is a large-scale demonstration proj- markets to work our main object of research. We ect run by a conglomerate of Danish universities, the coined the term “markets for collective concerns” to Danish Energy Association, and IT and appliances describe markets that are also policy instruments, and firms. EcoGrid 2.0 is an ongoing policy experiment set we call the new type of expertise oriented towards put- on the Danish island of Bornholm and with the aim of ting markets to work the “organization of markets for testing a response to what has been identified as a key collective concerns and their failures” (Frankel el al. challenge to making the future energy infrastructure 2017). In this piece, I share some of the discussions economic sociology_the european electronic newsletter Volume 20 · Number 2 · March 2019 Notes on market design and economic sociology by José Ossandón 32 and questions we have been struggling with in the last few years. I share these discussions because, I believe, Note 1. The birth of the market they open up questions that are not only relevant to us but also to the readers of this newsletter. The point is Timothy Mitchell (2011) has made an important sug- that the recent transition towards market design in gestion: “the economy” was not born until the economics is also an invitation – to us, economic so- mid-twentieth century. With this, he does not deny, as ciologists – to think about economic sociology and shown by Foucault in his Security, Territory and Popu- some of the assumptions of our particular approach to lation, for instance, that economists and a distinct the economy. realm of government called political economy existed As we know, economic sociology is affected by well before that time but suggests that it was only in developments in economics. It is not that economic the mid-twentieth century that the economy started to sociology is economics; it is a different discipline, with be seen as a whole that could be counted and referred its own concepts, methods, and traditions. However, to that way. Playing with Michel Callon’s terms, Mitch- at least in the last few decades, the main movements in ell suggests that with the amazing growth of economic economic sociology have responded to developments statistics that enabled the millions of transactions car- in economics. Notably, the New Economic Sociology ried out in a given country to be counted, summa- developed in the 1980s in the US, as exemplified in rized, and inscribed, economists for the first time per- Granovetter’s (1985) programmatic statement, was a formed a calculable “economy”. The economy repre- reaction to the imperial expansion of economics in sented a new type of technical expectation. It was un- academia. Sociologists needed to prove that their ju- derstood as a system that could be quantitatively risdiction was not limited to studying those aspects of modeled and steered by economists turned man- social life that economists cannot explain (i.e., non- ager-engineers that became experts in balancing logical action), but that sociology starts with an alto- things like inflation, unemployment, or exchange gether different approach (embeddedness), which, rates. In the terms used in An Inquiry into Modes of like rational choice, can be applied to everything, in- Existence (Latour 2013), the economy became an act cluding the study of economic issues. Similarly, the of organizing. new new economic sociology (McFall & Ossandón The apogee of the economy, however, did not 2014), the influential European movement initiated last very long. It is here that Mitchell’s remarkable with Callon’s 1998 The Laws of The Market, was also a story in Carbon Democracy ends. The conception of reaction to economics. This time, however, the reac- the economy as a machine that can be expertly steered tion was not against the colonization of academia by by an educated technocracy became contested, espe- economics but against the increasing impact of eco- cially by the very influential “thought collective” nomics in the economy. What Callon and others united around the Mont Pèlerin Society (Mirowski & (Çalışkan and Callon 2010) provide are concepts and Plehwe, 2009). The most radical version was devel- methods to analyze how the economy is “economized.” oped by the group of Austrian economists led by The question that bothers me, and that I want to share Hayek and continued by the likes of Buchanan and the in this contribution, is whether a new type of econom- Public Choice School.